tv Bloomberg Daybreak Australia Bloomberg May 12, 2022 6:00pm-7:00pm EDT
haidi: we are counting down to asia's major market open. shery: stocks rebound in the final hour of trading on wall street after -- as the fed says 75 point rate hike is not a consideration. haidi: -- shery: beijing denies the city will be lockdown. we are seeing u.s. futures under pressure in the asian trading session after the s&p 500 fluctuated widely. he saw a big rebound in the final hour of trading.
we have the 10 year yield also falling toward 2.8%. ppi numbers out today again rising more than expected. crude prices are up. this after seeing a little bit of pressure in the new york session. we have news coming from organizations that we may be seeing a tight supply when it comes to fuel inventories. all of the action seems to have been in the crypto space. the volatility, the panic subsiding. the dominoes continue to fall. we talk about bitcoin trading around $28,000 after falling. either also continuing to see the pressure. we had tether continuing to collapse and fall away from the dollar peg.
tether also seeing a many crash, it did recover but sentiment is hit in this market. when it comes to coinbase, one website saying we lost $200 billion of wealth in the past 24 hours or so. difficult to calculate given the fluctuations in the market, but suffice it to say that is a huge amount. not surprising, we're hearing from janet yellen saying this is really bad and what is happening really shows how we could continue to see the selloff. she doesn't see these crypto moves as a threat to financial stability. another guest also talking about what is happening in the crypto space saying this is an indicator of pessimism. cryptocurrencies were once seen as a risk hedge. not anymore. they are spreading that risk sentiment around the world. contagion through retail investor sentiment may be the cause.
retail investors have been already hit hard by the fading of the meme stock craze. now you have cryptocurrencies also taken a hit. you're seeing this translating into broader anxiety. haidi: the crypto investor has become the standard bearer of fear and caution. it's not just crypto story. we are seeing so many endemic darlings suffering. kathy woods arc -- the etf is nearing a pandemic low. it plunged another 10% on wednesday. some names have been so popular throughout the last couple of years. this coming a day after its third worst performance on record. the innovation etf 3% lower.
it is 3.5% away from the march 2020 levels. shery: a lot of concern in the broader markets with digital assets plunging. let's discuss all of this with bloomberg's managing editor for crypto. and also our cross market reporter. where do we go from here? >> the only thing you can expect is more volatility. one of my colleagues was just pointing out tomorrow is friday the 13th. we are seeing a couple of things playing out our wants. one is fear trade where even within crypto, there are elements of the market being perceived as less risky or less volatile than others.
we are seeing an attempt, a flight out of crypto into other places that are seen as safer bets. what direction those things are moving on a given day, that's within the volatility is coming from. haidi: the breath and speed of collapse that we saw in the previous session, what does that tell us not crypto and the fears across the broader investing sentiment right now? >> it tells you that crypto is a very liquid asset class. more broadly, it is it is prone to overreaction potentially or at least to reactions that compound and have a tendency to be self fulfilling. a phrase that was thrown around a lot was death spiral. we heard variations on catching a falling knife. some other things that make crypto attractive to people is that it's not as closely
institutionalized asset class, it is less regulated at best. those things in a crisis serve to make it easier for the kinds of dramatic movements with relatively few -- shery: explain what we are seeing in the broader markets. it's not like the crypto world and the mainstream markets are that connected. some have said it's retail sentiment that's the issue. >> we have also had a volatile trading day in equities. mary daly said a 75 point basis hike is not a consideration.
just like what we are seeing with crypto investors, that equity space is feeling a lot of jitters and anxiety. they're left wondering how much and how fast the fed -- they are looking for clues everywhere. that came in the form of ppi today. when the federal reserve representative made that comment , we saw treasuries rise and the greenback advancing. haidi: trying to work out where the bottom is. have we reached the bargain-hunting stage yet? parks a lot of the sources we have talked to say we have not. it's tricky to say where the bottom is.
one analyst said we are not at the bottom yet, but we might be at the beginning of one. another source said we are not just there quite yet, but they also said that we are near one because investors have already priced in the bad news. what more can happen? it's hard to tell. today, we almost reached bear market territory. it's interesting because people look at bear markets closely. it's an indicator of what's ahead. usually, it is a forthcoming recession. in the 14 times that the s&p 500 completed the requisite 20% bump in the last 95 years, only twice the u.s. economy not strengthen within a year. it's something that investors are closely watching. haidi: let's take a look at
asian markets. shaping up for the final trading day of the week. it is a down session looking to the start of trading in asia. australian futures, little changed. suggesting that at the start of cash trading, we might see a decline. the aussie dollar is sitting well under 70 u.s.. that dollar strength remains resilient at this point. we're also watching new zealand where we are seeing tepid training. -- trading. a lot of the bitcoin related names, one etf began trading in the third day we will see whether the pullback in fear factor when it comes to crypto trading overnight will have a positive impact. the dollar yen holding at just over 1.28. we have a freefall being
potentially over now as we see more stability in that currency. let's get the vonnie quinn. >> bloomberg has learned that elon musk wants to scrap the margin loan linked to the tesla shares he was going to sell to buy twitter. beijing has denied the city will be locked down while urging people not to hoard food among speculation that the lockdown will be tightened. the government says it will conduct rounds of mass testing through the weekend. beijing reported 36 kbit -- new cases. a veteran lawmaker is returning to the role of prime minister of sri lanka for the sixth time. he was named just days after the
previous leader resigned. germany is accusing russia of using energy exports as a weapon . prices jumped on supply concerns. germany's economy minister downplayed the latest cuts. global news 24 hours a day on air and on bloomberg quicktake. powered by more than 2700 journalists and analysts in over 120 countries. i'm vonnie quinn. this is bloomberg. shery: still ahead, and interview, the ceo joins us to guess the company's latest earnings. plus, why j.p. morgan does not
services. >> this is outrageous. >> we will have to see the fed react. >> 50 basis points in june and july. >> we step back and look at the whole picture. >> we are fighting and inflation battle on two fronts. on the other hand, we have continued limitations of supply. >> you have a growth scare happening. >> a lot of conflicting signals. shery: some of our experts on the growth scare inflict in the markets. haidi: joining us now is joyce chang of jp morgan. what do we need to see before's come down a bit? >> inflation in the u.s. could
be close to peeking, but it has been going up and the rest of the world. the question is, where does this level? we are seeing the inflationary pressures on the supply side for the wage inflation and also the commodity side. even if we have seen the peak, the fed will continue to have to move we think it's 50 basis points for the next two meetings. 25 basis points after that until you get to 3% or 3.25% next year. i think volatility will stay with us and there is still the growth concerns well. in europe and in china. >> some of the outliers when it comes to monetary policy diversions are the pboc and the bank of japan. what do you see within those markets? it's difficult when it comes to china. there's a lot to look at in those areas. >> looking that china, it's
really about the growth story. the omicron lockdown. we have just taken down our china forecast to 4.3%. it's about omicron in china right now. the valuations are getting more attractive across the board, but we could see this volatility stay with us for some time. >> valuation has been attractive especially in the energy sector. a lot of the buying in that space, could we still find some opportunity? parks i think you will still see opportunities on the commodity side. we do see oil remaining high. perhaps going all the way up to 120. we have ruled out worst-case scenarios, because a lot of this russian oil will get rerouted.
non-opec producers will come online. you have to member that the energy still does have an upside. it is only 3% of the waiting in the index. small energy holdings compared to the last cycle where it was a 12% rating. i think the commodities which a been one of our consistent recommendations it still a good place to be. >> how about the rising commodity prices, how much does it impact what we are seeing in the, growth space? right now whether it's in crypto or traditional assets in trading on wall street, a little bit of panic seems to have set in. is that what we are seeing in mainstreet as well? >> we are not seeing that in mainstreet in the u.s.. what we are seeing is this diversions between the consumer numbers and consumer confidence. the confidence index has gone down. if you look at the consumer balance sheet, excess savings of
$2.5 trillion. consumer spending that is relatively strong as well. it's the distinction between confidence and what we are seeing in the actual behavior. we have seen consumer spending go up 2.4%. i think we are far away from recession in the u.s.. the risk is being priced in. liquidity is a problem in this market. it doesn't take much to move the market. haidi: a similar set of challenges for these banks, inflation, what to do about rates without causing recessionary conditions. in terms of communication, do you think one of them has done better than others westmark >> the message is you need to move as explicitly as possible. central banks take this seriously. they are prepared to move into restrictive territory if they need to do that.
they are looking at the real economy and i don't think they are is concerned about the markets. that's one reason why you will continue to see choppiness. member, we also have quantitative tightening. we think the quantitative tightening could be as simple as 210 basis points of additional tightening. >> always good having you with us. that you so much for your insight. you can get a roundup of the stories that you need to note to get your day going in today's edition of daybreak. you can customize your settings so you only get the news on the industries and assets you care about. this is a blue -- bloomberg. ♪
financing for his buyout of twitter. what are the latest mechanics of this deal? >> this does change things. it was only a week ago that elon musk had raised $7.1 billion of equity financing from a broad range of investors. what that did was reduce the margin loan components from 12.5 billion to 6.2 5 billion. that margin loan portion has -- ratio of 20%. elon musk had put tesla stuck in there as collateral. i boosting the equity portion further, experts say 6 billion additional financing, it takes the margin loan off the table. it do risks the deal for everyone involved.
clocks are there personal reasons for him wanting to do this? >> yes, a big chunk of his net worth, if you look at his tesla equity including options, or than 100 billion dollars but about half of it elon musk borrows against the value of that stock. he has always complained about being cash poor. he doesn't take a salary from tesla or spacex. all of that stock is collateralized in the forms of various debt. for him, this takes that off the table. he has sold tesla stuck recently. it makes him sort of in a better cash position to this deal off. what we are hearing is that there have been some key departures. a hiring freeze internally. also, some offers to new
employees have been made being rescinded because the company is in flux waiting to see what happens with this deal. wall street is having some doubts. in the main time, management is trying to work out what the company looks like under elon musk. internally, a hiring freeze and everyone is waiting to see. >> ed ludlow with the latest on elon musk and the twitter deal. softbank has reported record losses. the fund has been grappling with lockdowns. among division funds biggest losers are didi. an internal review to spin off asian regulations.
this after the biggest shareholder pushed for a business to help improve returns. we are told executives are against a spinoff. airbnb has announced its biggest change in a decade as it looks to boost business during the travel season. the company is introducing a new set of satisfaction guarantees for guest and is staffing up an army of customer service agents. the ceo told us the china lockdowns are affecting his business. >> primarily people in china leaving china obviously crossing a border going to other countries. japan was popular. south korea, they are going to europe and other places. because of the situation with china and covid, there is not a huge amount of outbound business . our business in china is not
>> let's get to some breaking news. manufacturing and indicators for the pmi just crossing the bloomberg. it is a fall 51.2. new zealand's economy continues to recalibrate. the full opening of international borders and other restrictions being dropped as well. we are seeing the pmi falling to 51.2. shery: let's take a look at nexon's estimates. south korean sales a most 60% as well. joining us for an exclusive conversation is the president and ceo of nexon. china is having a drag on your
performance recently. what do you expect to see in the country now that we are expecting new gaming licenses to be issued? parks >> we will see about that. trying to protect how that's going to work out is not what we're about. we want to see is strong performance and our live games. in that score, we have done terrific. we had a great quarter for china dungeon and fighter and we are happy with our live operations and we think it's a terrific market. >> when can we expect the mobile game to launch in china? >> we don't have any updates, we will see how it goes. the mobile game launched in korea recently and it has been doing extremely well. way beyond our expectations. what is most gratifying is -- about how the game is doing is the retention numbers have been very strong. people keep coming back.
they are voting with their feet to come back and play more of the game. >> tell us about the south korean -- south korean market. what do you continue to see, this is your biggest operation. >> we were founded in south korea. we think that the market is great at least for us. games like maplestory which is one of our biggest franchises, dungeon and fighter, sudden attack and fifa. they have been doing well. we expect that to continue for q2 and the balance of the year going forward. we are happy about that. >> these results have positive contrast when you look at the trend we are seeing across other mobile tech entertainment related companies. one of the biggest catalyst for future growth and to be able to avoid being caught up in the slowdown? >> we are in the business of
giving a lot of value for a small amount of money then scaling that business to tens of millions of people around the world. that business model has been incredibly robust in terms of downturns. we joke internally that we do best in recessions. it's because we do a lot of, structured ourselves to deliver a lot of value for a small amount of money for the user. we consider our fortress balance sheet, we have billions of dollars on the balance sheet and we generate $1 billion per year in cash flow. we are not affected by things like trade and supply chains or anything like that. we have a very robust business in any economic environment. >> speculative tech and newtek opportunities like the metaverse offer a world of expansion
possibilities. as a big question at the moment over the entire asset class. how much caution do you approach these investments and are you positive on these possibilities? >> we never use the word metaverse although you could argue that nexon was the first metaverse company. we crated the first mmorpg 25 years ago in korea. we crated the first virtual currency in a game called quiz quiz here in korea. we call it virtual worlds to be more specific about the type of entertainment we are providing. we think that business is stronger than ever. then you bring mobile into the equation and you realize mobile is not some underpowered device, it is a workstation in your pocket. when you realize the processing capability, it's incredibly strong. it's stronger than an xbox and the networking layer is strong.
pretty much everybody has a high-end mobile device in their pockets these days. tens of billions of users throughout the world. we think that bodes very well for the future of our business and businesses like it. >> how do you reach those users beyond your core market? are you looking at more partnership? >> we have been developing games around the world. we are very excited some of our new products coming out from our studio in stockholm, sweden called embarq studios. we are excited about the launch of that and they will be on multiple different platforms. for the products we bring out of the various studios around the world. we think that each of these different products it's just a window into a virtual world rendered in the cloud and it delivered to the internet. again, everybody has access to these devices now.
if you deliver a compelling entertainment experience that keeps people coming back and you are careful to not overcharge for that, you give a lot of value for money. we think we will continue to have a very large audience for that then we will be able to continue to scale that for a long time. >> the people keep coming back even with the covid restrictions being dropped? in south korea, they stopped using outdoor masks. >> yes. the covid restrictions are really a distraction. if you have a fundamental business of bringing value to customers over time, they will keep coming back. it has been our experience anecdotally. also in looking at the numbers in our business. >> always great to have you with us. that was the president and ceo of nexon.
softbank posting record annual losses. this is all about the continued route across tech. >> the tech wreck has taken its toll on softbank. a stunning loss $20 billion in the vision funds. this is a company that invests primarily in private companies, startups through the vision fund. it is the publicly traded company that crushed the value of the portfolio. it has a lot of money losing tech firms that traded at skyhigh valuations during times of easy money. holdings like a south korean e-commerce company, didi global, and global losses for the year once they were the main driver of the vision fund and now they are the biggest drag.
the year-to-date decline is in the high double digits. down 15% year to date. in short, he is paying steep price for his wager on companies and they are dramatically scaling back on their investments doing just 2.5 billion in the january to march quarter. that's a dramatic drop from the $10 billion per quarter. you have to remember that just one year ago, softbank set a record for the highest quarterly profit in japanese history. this is a clear signal that times of changed. >> one area where softbank was more bullish was arm. >> at the end of the press conference, he said arm presents an opportunity to play offense. he is very bullish on this global chip designer that is preparing for an ipo.
he detailed how the business is growing and also pointed out the path to an ipo has been cleared by the removal of the roque ceo. that is controversy that has finally been resolved. when asked about the timing, some said the market -- markets are turbulent. he said that softbank will still maintain its majority stake in the company after it goes public. notably, arm ceo told us that it is doing extremely well, the revenues have surged as it is finding a more expanded market in terms of different industry for its chip products. >> that was su keenan. up ahead, beijing officials denying rumors that the city will be placed under lockdown. this is bloomberg. ♪
likely to raise rates half a percentage point at the next of its two meetings -- two of its next meetings. jay powell one senate confirmation with an overwhelmingly bipartisan vote. argentina central-bank is said to have raised rates for the fifth time this year to keep up with inflation. sources tell bloomberg it increased the benchmark rate by 200 basis points to 49%. the decision has not officially been announced. argentina prices rose 6%. tether briefly lost its dollar peg. the top rated stable coin fell to a low before bouncing back. the ceo assured customers they
will not have a problem trading tether tokens one-for-one. south korea, japan, and the united states condemned north korea's latest test. south korea inaugurates its new president this weekend. president biden visits the region in the coming days. north korea confirmed one death from covid-19 and announced a lockdown. the first image of the supermassive black hole at the middle of the milky way. it is considered supermassive because it has a mass more than 4 million times the size of our son. it is on the second time visual evidence of a black hole has been captured.
global news 24 hours a day on air and on bloomberg quicktake. powered by more than 2700 journalists and analysts in over 120 countries. i'm vonnie quinn. this is bloomberg. shery: beijing officials trying to quash rumors that shanghai style lockdown is imminent in the capital. for the latest, let's bring in our chief correspondent, stephen engle. >> i like the terminology, supermassive. the rumor mill is supermassive right now in beijing. i lived there for a number of years. because authorities control the messaging, the rumor mill spreads and that's what has happened in beijing. the rumor mill cranked up that shanghai style lockdown was imminent and people lined up to grocery stores stocking up on supplies and food. that prompted a press conference from officials urging people and
reassuring them that a lockdown, a technical lockdown is not going to be happening and there will not be a quiet time the neighborhoods in shanghai are experiencing. that's probably a euphemism for a pseudo-lockdown with people cannot leave their homes and cannot have deliveries to their homes. beijing has never had a lockdown throughout the two years of the pandemic. restrictions keep adding. 36 new cases were found in the 24 hours up until 3:00 p.m. yesterday. that doesn't sound like a lot, but authorities are saying they are in the middle of a grueling battle to extend which the virus. people the world over, when there are rumors of lockdown and potential threats to their families like in shanghai, they protect themselves and that is what is happening.
>> what is the economic toll of their zero covid strategy? >> this is a rare admission coming from the deputy head of the national statistics bureau in china saying that covid zero policy, he just said the wave of covid which is associated with the response from the government and that is lockdowns in various cities including shanghai and others that we have seen our causing what he calls a huge shock to the economy. he did through this news article say that it is a short-term impact on production and people's lives, but as we have seen a chorus of criticisms of zero covid or many economists ratcheting down their expectations for gdp. a lot of the experts say this
time around compared to two years ago, we are unlikely to see a v-shaped recovery like we saw in china in 2020 as supply chains got going and people got moving again. with omicron, it can flare up at any time and if you have zero covid, the policy is you have to contain it. that's why the risk to a v-shaped recovery if that will ever come in china given the lockdown situation it's going to be more muted than 2020. >> stephen engle the latest from china. you can catch up on past interviews on the interactive tv function tv . you can join in other conversations as well. send us instant messages during the show. check it out at tv . this is bloomberg. ♪
three year yield dropping to the lowest level we have seen since the start of may. have some calming restored to the market. shery: take a look at the commodity space. we are seeing oil prices gaining ground extending the gains we saw in the new york session. we had a report pointing to the tighter supplies in fuel stockpiles globally. natural gas raging higher. gains of 14% given that we are seeing the flows from russia through ukraine continue to fall as the war's ongoing. germany saying that russia is using the energy exports as weapons. we are also seeing that war
choke off supplies of ukrainian wheat. those prices are also gaining ground. when it comes to base metals, copper leading the decline. we are talking about the lowest level in seven months given concerns about the global demand picture especially with the chinese economic slowdown. >> a fallen profits during the second quarter of the sanctions against russia. the ceo told us that siemens has started winding down his business in russia after 170 years. >> it delivered a strong performance in q2. despite the challenging environment, now coming to a question of more challenging environment, we decided to ramp
down our industrial business in russia. that impacted our numbers with 600 million net income impact, but it is mainly non-cash. all in all coming back to q2, in the top line 22% growth in intake and 7% growth -- >> you have been there 170 years. how long will it take to wind down this business? >> we do it in an orderly process. it depends on for instance in the service business our customers would take our service team. so far, we have no view on that and we make it an orderly process to respect what are people in russia did for the company and for our customers in the past.
for our customers, we give them a lead time for four weeks to say and now we stop operations. it's a tough decision after 170 years in the country, but there is no alternative and it's clear this is the way out -- the way our sanctions are supposed to work. >> europe is discussing an embargo on russian oil. after that, there is considerable exposure to russian gas for european consumers and businesses. what impact would an embargo on russian gas have on your company? have you made preparations for that kind of eventuality? >> siemens is low energy intensive company. our goal footprint is 400,000 kilotons per year. we are not that intensive and we don't rely that much on gas and oil. impact on siemens directly is minor.
the problem that we have is our customers. in an energy intensive companies like chemistry, cement, metals, glass. we see the alternatives, oil is a little bit easier to get. for gas, it would be difficult. we studied that intensively and we figured out that the gas embargo would hit the industry of germany badly. it would have a huge impact in terms of shutting down unemployment and our economy. >> that was the ceo of siemens. here's a quick check of the latest headlines. twitter has announced a hiring freeze and other cost-cutting efforts reflecting the company state of uncertainty while it awaits elon musk's takeover. the company will not hire new employees and may rescind offers already out with some
exceptions. pimco saw outside clients pull money out. the bond manager says $14.3 billion went out the door in the first quarter. investors fled fixed in some spirit -- fixed income securities. coming up, and investment firm says market volatility is here for a while and with high dispersion in the markets, the environment is rife for stockpicking. ♪